What do ESG and sustainability mean for procurement?

ESG sustainability

Matjale MatsaungSustainable procurement involves incorporating Environmental, Social and Governance (ESG) principles into procurement processes and policies, Matjale Matsaung, Global Sustainable Procurement Expert & Managing Director, Sechaba Bauen, told delegates at the Smart Procurement World Indaba 2022.

The aim is to ensure that business with suppliers is conducted in a manner that aligns with corporate social responsibility strategy. Embedding ESG goals in procurement processes could include:

  • Using less energy and water, eliminating waste, reducing fuel emissions
  • Eliminating child labour, actively encouraging diversity, and
  • Limiting supply risk, ensuring compliance and exhibiting leadership

Matjale emphasised that traceability and visibility are vital to establish the source and provenance of goods. We can use the same spend analysis tools to establish sources and map the supply chain. Local sourcing is an opportunity to get clearer visibility into your suppliers and your suppliers’ suppliers.

Your sustainable procurement strategy must be linked to corporate strategy. Where is the greatest opportunity or greatest risk? Start there, advised Matjale.

It is not easy to achieve company ESG goals in practice if procurement as a function does not have influence within the organisation. Executive and stakeholder support, people and processes are the enablers. ESG should be built into procurement key performance indicators (KPIs) and monitored.
ESG corporate reporting is in its infancy, but procurement has a role to play by providing timely and transparent input.

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